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tv   60 Minutes  CBS  August 17, 2014 7:00pm-8:02pm EDT

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captioning funded by cbs and ford >> kroft: what's the headline here? >> "stock market's rigged." the united states stock market, the most iconic market in... in global capitalism, is rigged. >> kroft: by whom? >> by a combination of the stock exchanges, the big wall street banks, and high frequency traders. >> kroft: who are the victims? >> everybody who has an investment in the stock market. >> kroft: so who figured all this out and what's being done to correct it? best-selling author michael lewis talks about it tonight on "60 minutes." >> pelley: there's been a lot of debate about obamacare and whether it's possible for the government to cover every american. eight million have signed up for it so far, but we found out many may never get on board. >> come on in out of the rain. hello, mr. hank.
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how are you doing? >> pelley: for a fortunate few, there is the health wagon. >> can you breathe for me? >> pelley: who are these people who come into the van? >> these are people that are in desperate need. they have no insurance and they usually wait, we say, "until they're train wrecks." >> safer: for almost 90 years, the place to go for both sophisticated and laugh-out-loud humor has been the "new yorker" magazine. chances are, the cartoons are the first things you turn to. >> i suppose you came in here to show me a cartoon. >> safer: every wednesday, a nervous band of ink-stained wretches gathers, hoping against hope to get their latest efforts published. sam gross, for instance, pitches one of his masterpieces-- a dog at heaven's gates asking, "is there any chance of getting my testicles back?" >> i'm steve kroft. >> i'm lesley stahl. >> i'm morley safer. >> i'm bob simon. >> i'm scott pelley.
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about levemir® flextouch. covered by nearly all health insurance and medicare plans. >> kroft: this year marks the fifth anniversary of the current bull market on wall street, one of the longest and strongest in history.
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yet u.s. stock ownership is at a record low, and less than half of all americans trust banks and financial services-- some might argue, with good reason. in the past few months, state and federal authorities have launched investigations into high-frequency computerized stock trading that now controls more than half the market. as we reported last march, the probes were announced just ahead of a much anticipated book on the subject by best-selling author michael lewis called "flash boys." in it, lewis argues that the stock market is now rigged to benefit a group of insiders that have made tens of billions of dollars exploiting computerized trading. the story is told through an unlikely cast of characters who figured out what was going on and devised a plan to correct it. it's had a huge impact on wall street, with the top u.s. stock regulator, the securities and exchange commission, vowing to take action. michael lewis broke the story
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here jus before the book came out. what's the headline here? >> michael lewis: "stock market's rigged." the united states stock market, the most iconic market in... in global capitalism, is rigged. >> kroft: by whom? >> lewis: by a combination of the stock exchanges, the big wall street banks, and high frequency traders. >> kroft: who are the victims? >> lewis: everybody who has an investment in the stock market. >> kroft: michael lewis is not talking about the stock market that you see on television every day. that ceased to be the center of u.s. finanial activity years ago, and exists today mostly as a photo op. this is the stock market that lewis is talking about, the one where most of the trades take place now, inside hundreds of thousands of these black boxes located at more than 60 public and private exchanges, where billions of dollars in stock change hands every day with little or no public documentation.
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trades are being made by thousands of robot computers, programmed to buy and sell every stock on the market at speeds 100 times faster than you can blink an eye-- a system so complex, it's all but invisible. >> lewis: if it wasn't complicated, it wouldn't be allowed to happen. the complexity disguises what is happening. if it's so complicated, you can't understand it, then you can't question it. >> kroft: and this is all being done by computers. >> lewis: all being done by computers. it's too fast to be done by humans. humans have been completely removed from the marketplace. >> kroft: "fast" is the operative word. machines with secret programs are now trading stocks in tiny fractions of a second, way too fast to be seen or recorded on a stock ticker or computer screen, faster than the market itself. high frequency traders, big wall street firms, and stock exchanges have spent billions to gain an advantage of a millisecond for themselves and their customers, just to get a peek at stock market prices and orders a flash before everyone
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else, along with the opportunity to act on it. >> lewis: the insiders are able to move faster than you. they're able to see your order and... and play it against other orders in ways that you don't understand. they're able to front run your order. >> kroft: what do you mean "front run"? >> lewis: means they're able to identify your desire to buy shares in microsoft and buy them in front of you and sell them back to you at a higher price. it all happens in infinitesimally small periods of time. there's speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds. but it's enough for them to identify what you're going to do and do it before you do it, at your expense. >> kroft: so it drives the price up. >> lewis: so it drives the price up, and in turn, you pay a higher price. >> kroft: michael lewis is not the first person to allege the stock market is rigged, or that high frequency traders are front running the market. but he was the first to find brad katsuyama, who is the first to figure out how it was being done.
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>> lewis: a very unlikely character, a trader at the royal bank of canada, a young canadian man named brad katsuyama realized that the market that he thought he knew had changed. the market seemed to be willing to sell a stock. but the minute he went to buy it, someone else bought it, the stock went up. it was as if someone knew what he was doing before he did it. >> kroft: back in 2008, katsuyama was 30 years old and running the royal bank of canada's stock desk in new york with 25 traders working for him. every time one of them tried to buy a large block of stock for a client, their order would only be partially filled and the price of the stock would go up. it kept happening over and over again. >> brad katsuyama: the best analogy i think is that your family wants to go to a concert. you go onto stubhub, there's four tickets all next to each other for 20 bucks each. you put in an order to buy four tickets, 20 bucks each, and it says, "you've bought two tickets at 20 bucks each." and you go back and those same two seats that are sitting there
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have now gone up to $25. >> kroft: what'd you think the problem was? >> katsuyama: i had no idea. i couldn't get answers. >> kroft: at first, katsuyama thought it must be that the technology at r.b.c. was slow, until he went to stamford, connecticut, and paid a visit to one of the largest hedge funds in the world. >> katsuyama: the same things that i was experiencing as a trader, one of the most sophisticated hedge funds in the world was also having the same problem. then the light bulb goes off. you say, "holy cow, this is... this is a huge problem." >> kroft: you were determined to get to the bottom of it. >> katsuyama: yeah. >> kroft: why? >> katsuyama: ( laughs ) because it just didn't feel right. it didn't feel right that people who are investing on behalf of pension funds and retirement funds are getting bait-and- switched every single day in the market. >> kroft: katsuyama suspected that the problem had something to do with plumbing, the way the trades were routed through fiber optic cables from his trading desk in lower manhattan to the 13 public exchanges in northern new jersey. but no one would tell him exactly what happened to his
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orders once he hit the "buy" or "sell" button. so he put together a team of technical experts, traders and, most importantly, an irish telecom guy named ronan ryan, who was an expert on high speed fiber optic networks. >> ronan ryan: i knew nothing about trading until my first day at r.b.c., when i sat in that three-hour meeting on algorithms. i called my wife afterwards, and i'm like, "holy crap, i have no idea what they just said." >> kroft: ryan had done work for the high frequency traders. he knew what they were building, and he knew about the colossal amounts of money they were prepared to spend. he told brad about a company called spread networks that had laid a high-speed fiber optic cable from the futures market in chicago to the exchanges in new jersey. they spent $300 million just to shave three milliseconds off the fastest route, and were leasing access to high frequency traders at $10 million a pop. >> lewis: from brad katsuyama's point of view, when he heard
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they were willing to spend that kind of money for milliseconds, it told him that the sums involved were vast. that was one of the first questions he said he had. he says, "all right, i'm getting ripped off, everybody's getting ripped off. but what does it add up to?" and i think when he heard the story of spread networks, he realized this is tens of billions of dollars we're talking about. >> kroft: ronan ryan also knew where all the cable was buried, and had detailed maps of the fastest routes from the financial district in lower manhattan to the various stock exchanges in new jersey, all calculated down to the millisecond. >> ryan: so i would sit there, roll out maps, and roll out this data center as a box and a line going through it. and they had no idea what i was on about. and then i'd be like, "hey, are you guys aware of where these data centers are located? of course you're arriving there at different time intervals." >> kroft: for brad, the maps turned what had been an abstract idea into something he could actually see. the first place his orders were landing was the bats exchange across the river in weehawken, new jersey, and high frequency traders were lying there in wait. >> lewis: brad realizes, "oh, my god, that's how i'm being front- runned.
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i'm being front-runned because my signal gets to the bats exchange first, and they can beat me to all the other exchanges." >> kroft: it only took a tiny fraction of a second for brad's trade to reach the next exchanges on the network, but the high speed traders were able to jump in front of him, buy the same stock, and drive the price up before his order arrived, producing a small profit of just one or two pennies. but it was happening to everyone's trades millions of times a day. >> ryan: that adds up. >> kroft: you make it sound like a skim. >> ryan: what else would you call it? >> lewis: one hedge fund manager said, "i was running a hedge fund that was $9 billion, and that we figured that the, just our inability to make the trades the market said we should be able to make was costing us $300 million a year." that was $300 million a year in someone else's pocket. >> kroft: is this illegal? >> lewis: no. that's the thing that's so shocking about all this. it should... >> kroft: well, you used the word "front running." front running's illegal. >> lewis: this form of front running is legal. it's legalized front running. it's crazy that it's legal for some people to get advance news on prices and what investors are
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doing. it's just nuts. shouldn't happen. >> kroft: ronan knew the only way to beat the high frequency traders was to take away their milliseconds advantage that allowed them to sniff out slower trades and beat them to the exchange. he had an idea how to do it. >> katsuyama: and he said, "you're probably better off trying to go slower," which means send the order to the exchange located the farthest away first and send the order to the one that's located closest to you last. so stagger when you send them out with the goal of arriving at all places as close to the same time as possible. >> kroft: katsuyama and his team developed software that did just that, allowing the orders of royal bank of canada's customers to reach all of the exchanges at the same time, cutting the high frequency traders out of the equation. >> katsuyama: and essentially, our fill rates went to 100%. we couldn't believe it when... when we actually figured it out. >> kroft: so you beat speed by slowing it down. >> katsuyama: yeah, as crazy as that sounds. ( laughs ) >> kroft: katsuyama and his team
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went out and began selling and explaining what they had discovered to the big mutual funds, pension funds, and institutional investors, people who'd had suspicions that they were being front run but didn't know how. and nobody had really bothered or tried to figure this out until brad katsuyama came along. >> lewis: it was in nobody's interest to, correct. i spoke to dozens of investors, big investors, famous investors who... who said that, "when brad katsuyama came into my office and laid out to me how the market was rigged, my jaw hit the floor." i mean, "i knew something was wrong, i just didn't know what it was and no one had told us." >> katsuyama: part of those meetings led us to believe, "holy cow, this is... this is really something." because some of the most sophisticated, largest asset managers in the world, this is the first time they were hearing this story. >> kroft: and some of the most famous names in the american stock market heard the pitch... >> lewis: the capital group, t. rowe price, fidelity, vanguard, i mean, it, one after another. he was in their offices. they said, "this man walked in. why is he going to know how the
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stock market operates?" and... and at the end of an hour, they said, "oh, my god, he understands." >> kroft: hedge fund titan david einhorn of greenlight capital is one of the believers. was he able to show you how your orders were being front run? >> david einhorn: oh, yeah. they had... they got the marker and the white board and started drawing maps and boxes, and wires and locations. and yeah, we went through it in some detail. >> kroft: did you find it interesting? >> einhorn: it was. it was. >> kroft: clients like einhorn encouraged brad and his team to do something bigger. that's when katsuyama, a conformist even by canadian standards, decided to do something radical. in 2012, he quit his high-paying job as head trader at r.b.c. and went off with some of his team to start their own exchange. you were making good money at royal bank of canada? >> katsuyama: yeah, right. >> kroft: millions of dollars? >> katsuyama: right. ( laughs ) i guess... i guess everybody knows that now, right? right, yeah.
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>> kroft: why did you want to go off and walk away from that job and start a stock exchange? >> katsuyama: yeah, wasn't an easy conversation to have with my... my wife, that's for sure. it almost felt like a sense of obligation to say, "we found a problem. it's affecting millions and millions and millions of people. people are blindly losing money they didn't even know they're entitled to. it's a hole in the bottom of the bucket. >> kroft: they set out to build an exchange funded exclusively by large traditional investors. they called it i.e.x., the investor's exchange, and quietly launched it in october with the support of some of the biggest players on wall street. and it comes with built-in speed bumps to eliminate the advantage of high speed predators. >> lewis: and the way they did it was they coiled 60 kilometers of fiber optic cable between themselves and the high frequency traders' computers. they call it "the magic shoe box," and it's a box and it looks like it's got fishing line in it. but essentially, a high frequency trader, if he tries to
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react on the i.e.x. exchange, his trade goes for 60 kilometers until... so he's... he's in east jesus. >> kroft: so it gets there the same time as everybody else. >> lewis: it gets there same time as everybody else's. >> kroft: do you think they can game you? >> ryan: i think that they'll try to game us. i think the fact, though, that we've gone and met with the majority of the biggest high frequency firms to explain what the magic shoebox is doing, and that people haven't said, "oh, that's rubbish, that won't work." we've had many ask us for a backdoor, to be honest. so that says something, that it'll work. >> kroft: the exchange is off to a strong start, although it is still very small with lots of powerful enemies that like the status quo and are trying to starve i.e.x. by discouraging customers from using them. greenlight capital's david einhorn is one of the investors. do you think i.e.x. will survive? >> einhorn: i think it's going to succeed. i think it's going to succeed in a very big way. >> kroft: i.e.x. received a strong endorsement from goldman sachs, whose top executives cited it as a model for a more stable and less complicated
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stock market. >> katsuyama: we're selling trust. we're selling transparency. and... and to think that trust is actually a differentiator in a service business, it's kind of a crazy thought, right? >> lewis: why is this kid, why is he able to, all of a sudden, sit at the center of the american stock market? and the answer is, when someone walks in the door who is actually trustworthy, he has enormous power. and this is the story-- the story of trying to restore trust to the financial markets. >> cbs money watch update sponsored by: >> glor: good evening. fed chief janet yellen meets with central bankers in jackson hole, wyoming, this week. sprint will reportedly unveil unlimited talk and text plans for as it little as $50 a month. the sultan of brunei is bidding
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to buy a series of new york hotel, including new york's famed plaza. i'm jeff glor, cbs news.
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>> pelley: more than eight million people have signed up for obamacare. but many others have been left out. millions of americans can't afford the new health insurance exchanges. for the sake of those people, obamacare told the states to expand medicaid, the government insurance for the very poor. but 24 states declined. so, in those states, nearly five million people are falling into a gap-- they make too much to qualify as "destitute" for medicaid, but not enough to buy insurance. as we first showed you in april, we met some of these people when we tagged along in a busted rv called the "health wagon,"
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medical mercy for those left out of obamacare. the tight folds of the cumberland mountains mark the point of western virginia that splits kentucky and tennessee-- the very center of appalachia, a land rich in soft coal and hard times. around wise county, folks are welcomed by storefronts to remember what life was like before unemployment hit 9%. >> teresa gardner: the roads are narrow and windy curves, so it's not easy to drive the bus. >> pelley: this is teresa gardner's territory. she can't be more than 5",4', but she muscles the bus through the hollers, deaf to the complaints of a 13-year-old winnebago that's left its best miles behind it. >> gardner: having problems seeing here. >> pelley: you really can't see. the wipers are nearly shot and the defroster's out cold.
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there you go, you can see a little better now. ( laughs ) i understand there's a hole in the floorboard here somewhere? >> gardner: yes, it's right over there, so don't get in that area. ( laughs ) >> pelley: the old truck may be a ruin, but like most rvs, it's pretty good at discovering america. gardner and her partner, paula meade, are nurse practitioners aboard the health wagon, a charity that puts free healthcare on the road. >> how many patients do we have on the schedule today? >> he was going to see what he can free up for us. >> pelley: the health wagon pulls up in parking lots across six counties in southwestern virginia. >> y'all come on in out of the rain. >> pelley: it's not long before the waiting room is packed... >> hello, mr. hank, how you doing? >> pelley: ...and two exam rooms are full. with advanced degrees in nursing, gardner and meade are allowed to diagnose illnesses, write prescriptions, order tests and x-rays. >> stick your tongue out, "ah." >> pelley: on average, there are 20 patients a day-- that's recently up by 70%.
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the health wagon is a small operation that started back in 1980. it runs mostly on federal grants, and corporate and private donations. >> blood pressure a bit high before? >> just when i get aggravated. >> pelley: who are these people who come into the van? >> paula meade: they are people that are in desperate need. they have no insurance, and they usually wait, we say, "until they are train wrecks." their blood pressures come in emergency levels. we have blood sugars come in 500, 600s because they can't afford their insulin. >> pelley: but why do they not see a doctor or a nurse before they become, as you call it, "train wrecks"? >> meade: because they don't have any money. they don't have money to pay for labs. they don't have money to go to an e.r. and these are very proud people. they... you know, you go to the e.r., you get a $3,500 bill. and then what do you do? you're given a prescription, you can't fill it. that's why they're train wrecks. they have nowhere else to go. >> pelley: glenda moore had
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nowhere to go but the e.r. when the pain in her leg became unbearable. her job at mcdonald's making biscuits didn't include insurance that she could afford. >> glenda moore: the only doctor that would see me, you had to have $114 up-front just to be seen. >> pelley: what does $114 mean to your monthly budget? >> moore: oh, my gosh. that's half of my weekly pay. i make $7.80 an hour. my paycheck was about... after taxes, about $475 every two weeks. >> pelley: the pain was from a blood clot. she needed lovenox, a clot buster that costs about $500 for a full treatment. >> meade: was she on lovenox when she was discharged from the hospital? >> pelley: paula meade got the call from the e.r., which didn't want to bear the cost. the health wagon had the drug for free, and there was no charge for some stern medical advice. >> meade: you are going to die if you don't quit smoking, and it could be within a week.
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you need to stop now, okay? >> pelley: she took the advice to stop smoking and took lovenox, but one day she felt so bad, she went back to the e.r. >> moore: and they did a ct scan and an x-ray, and found the blood clot had went to my lung. but they also saw another mass on my lung, and then transported me to a bigger hospital. they found the lesions in my brain, so i was diagnosed with stage 4 lung cancer and brain cancer. >> pelley: what are the doctors telling you? >> moore: i start my treatment on monday, the brain radiation, and he seemed very... i mean, he seemed optimistic. >> pelley: are you hopeful? >> moore: i am. i have been. i don't know, i just feel very hopeful. >> pelley: hope, especially when the odds are long, has always been essential to survival in appalachia. the recovery from the great recession hasn't arrived. in coal these days, they just take the top of the mountain and
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you don't need many men for that. around here, about 1,000 were laid off in the last two years. 12% of the folks don't have enough to eat. and we met them waiting for their number at zion family ministries church, where a charity called feeding america was handing out just enough to get through a week, if you stretch. 1,654 lined up, a parking lot of possibilities for gardner, meade, and the health wagon. they've known these people and each other most of their lives. you've been together since eighth grade? >> meade: eighth grade, yes. >> pelley: why do you do this work? >> meade: because somebody has to. you know, there's people here, you know... we always... we had dreams. we wanted to move away from here. we all... you know, we did. and then, we come back and we saw the need. and actually, there's a vulnerable population here that's different from the rest of america. i mean, there are people... you can replicate this, but we're kind of forgotten. there's no one here to take care
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of them but us. >> pelley: these patients would be taken care of in the 26 states that expanded medicaid under obamacare. the federal government pays the extra cost to the states for three years, but virginia and the others that opted out fear that the cost in the future could bankrupt them. so health wagon patients we met have fallen through this unintended gap. >> do you have insurance? >> no, ma'am. >> pelley: have any of you tried to sign up for the president's health insurance plan? >> no... >> pelley: why not? >> brittany phipps: i can't afford it. >> sissy cantrell: i can't, either. >> pelley: sissy cantrell was laid off from a head start center. she's been suffering from migraines and seizures. >> cantrell: i cry for no reason at all, okay. >> have you been seeing a counselor? >> cantrell: no. >> okay. >> pelley: she came away from the health wagon with medication. brittany phipps works more than 50 hours a week, but that's two part-time jobs, so there's no insurance for her diabetes. so you're getting your insulin
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through the health wagon? >> phipps: i am now, yeah. >> pelley: and if that wasn't available, where would you get the insulin? >> phipps: i don't know. >> pelley: walter laney's diabetes blinded him in one eye and threatens the other. the health wagon stabilized him and set him up with a specialist. >> hey, walter, this is dr. isaacs. how's it going? >> walter laney: it's going pretty good. >> how have you're sugars been? >> laney: okay. they got my blood sugars back under control. before this year, i was in the hospital three, four times, and this year, i ain't been in none since i've been seeing them. if it hadn't a been for them, i don't think i'd be here today. >> pelley: outside the church where they were handing out food, we met dr. joe smiddy, a lung specialist who's the health wagon's volunteer medical director. >> joe smiddy: this is a third- world country of diabetes, hypertension, lung cancer, and c.o.p.d. >> pelley: dr. smiddy drives a second health wagon, a tractor- trailer x-ray lab. i guess they taught you
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something about radiology and all of that in medical school. did they teach you how to drive an 18-wheeler? >> smiddy: i did have to go to tractor-trailer school. and it took a long time. >> pelley: was that harder than medical school, in some ways? >> smiddy: it was very difficult to get anyone to insure a doctor to drive a tractor-trailer. insurance companies didn't believe me. >> pelley: his x-ray screen is a window on chronic, untreated disease, including black lung from the mines. >> smiddy: we've seen coal workers pneumoconiosis, emphysema, c.o.p.d., enlarged hearts. there's 15 of the 26 had significant abnormalities here today. >> pelley: just today? >> smiddy: just today. >> pelley: but when they leave your health wagon, they still don't have health insurance. how do they get treated for these things that you're finding? >> smiddy: we negotiate. we can talk to the hospital system. we don't leave any patient unattended. we raise money for them. >> pelley: you find a way. >> smiddy: we will find a way. >> pelley: they found a way to get glenda moore radiation for her brain cancer.
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but she'd been a smoker for 25 years, and she died three months after our interview. you don't like this idea of receiving charity? >> moore: no. oh, i hate it. my dad was in the military. and when he was diagnosed with cancer, he was taken care of. and i don't know, i just always assumed, you know, that's how it would work. >> pelley: do you think things would've been different if you'd had an opportunity to go to a doctor more often? >> moore: oh, definitely. i know it would be different. >> pelley: the outreach to all the people like glenda moore costs the health wagon about a million and a half dollars a year-- a third of that is from those federal grants, and the rest from donations. doctors volunteer and pharmaceutical companies donate drugs. but when we were with them... >> we got no electricity on the health side. >> pelley: ...they sure could have used a new truck battery. >> there goes. yay!
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>> gardner: can we give you all a free flu shot for helping us? >> need a free flu shot, beaver? >> nope. >> okay. >> pelley: teresa gardner and paula meade apply for grants, and travel to churches praying for donations and passing the plate. are there days you say to yourself, "i can't do this anymore." >> meade: oh, every day. not every day, i shouldn't say every day. there are a lot of days that you go home and you get frustrated because we're writing grants till 10:00 at night. we're begging for money. and you're almost in tears because we're, like, "okay, what are we going to do?" because i've got a family, too. it gets frustrating, it gets hard. >> pelley: it's enough to wear you out, teresa. >> gardner: we're pretty beat down by the end of the day on most days, really. but we do get more out of it then we ever give. >> meade: when you look at it practically, you think, "what in the world am i thinking?" but then i have that one patient that may come in and say, "couldn't bring you anything, can't pay anything, but here's a quilt i want to give you."
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and i mean, when they do that and they're so heartfelt and they put their arms around you-- "i don't know what i'd do without you." you're doing a lot better. it lets you think, "okay, i was put here for a purpose." >> gardner: and you can do it another day. >> you're a blessing to us. >> well, thank you all. y'all are blessing us. >> gardner: it's them, and that's what touches our heart. >> pelley: since this story first aired, meade and gardner have taken delivery of this new health wagon, and it should be out on the road in just a few weeks. but there's still no medicaid expansion in virginia-- the republican house has turned down that request from the democratic governor. >> and now a cbs sports update presented by pacific life. at the windham championship, bill macatee with you, camilla vijagas record his fourth pga tour victory and his first since 2010 while sang moon bayerned a
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spot in the fedex cup playoffs starting next week. turning to nascar, jeff gordon held off kevin harvick to claim his third sprint cup victory of the season. for more sports news and information, go to cbssports.com. was ten. he said, "you get the grades to go to col and we'll help out with the school of your choice." well, i got the grades and, with dad's planning and a lot of hard work, i'm graduating today with a degree in marine biology. i'm so thankful and excited about the future. [ male announcer ] for strategies on how to help your family achieve financial success, visit pacificlife.com. on how to help your family achieve financial success, if you have moderate to severe rheumatoid arthritis like me, and you're talking to your rheumatologist about a biologic... this is humira. this is humira helping to relieve my pain and protect my joints from further damage. doctors have been prescribing humira for ten years. humira works by targeting and helping to block a specific
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>> safer: now for some laughs. for nearly 90 years, the place to go for sophisticated, often cutting-edge humor has been the "new yorker" magazine. the very first cover in 1925 featured a caricature of a snooty new yorker of the day, right down to his monocle. they called him eustace tilley, an imaginary twit, mocking the self-importance of both the magazine and its readers. despite the excellence of the articles from a long list of legendary writers, those readers usually turn first to the cartoons. we've ventured behind the scenes to see how the drawings are selected. as for the man who picks them, he could be a cartoon character himself. if there's an intersection that
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screams new york, new york, it's 42nd and broadway-- times square, the theater district, the greatest show on earth. new yorkers of every stripe rubbing elbows with tourists and each other. the face in the crowd is bob mankoff, new york born and bred, headed to work around the corner, to a place where laughs are born, and also laid to rest. >> bob mankoff: i had this idea for a cartoon. this was basically a verbal cartoon. okay, people love to go to tuscany. and i had to sort of figure out, "okay, that's good, you know, tuscany is great." and what do they rave about in tuscany? the food and the people and everything. i thought of this woman on the phone, saying "we loved tuscany. the cell reception was fabulous and the wi-fi was to die for." ( laughter ) that's a badda-bing, badda-boom cartoon. no, i think this is okay... >> safer: mankoff is cartoon editor of the "new yorker." to say he knows his stuff is an
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understatement. he's studied every cartoon the magazine has published, from the roaring '20s to the present day. they form a stunning reflection of american mores and manners, the haves, the have-nots; fashion, art, big business, kids, pets, television, trends; and this being new york-- psychiatrists, of course. all told, 80,000 published cartoons. what are your... if you had to choose the five or six best...? >> mankoff: well, you know, i honestly... it's not just tough, it's impossible in a way because you would choose different ones in different ways. here are some great cartoons. the charles addams cartoon is classic. >> safer: addams' ghoulish family is about to pour boiling oil on some christmas carolers.
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>> mankoff: the michael crawford cartoon. >> safer: it's the french army knife-- all wine corkscrews. >> mankoff: that's a perfect cartoon. there's a michael shaw cartoon where there's a couple looking at the tv. >> safer: he's saying, "gays and lesbians getting married? haven't they suffered enough?" >> mankoff: then, there's a classic peter steiner from 1993, the two dogs in front of the computer saying, "on the internet, no one knows you're a dog." ( laughter ) the peter arno cartoon where the plane is crashing... >> safer: in arno's 1941 drawing, the pilot has bailed out, and the engineer is saying, "well, back to the old drawing board." >> mankoff: that phrase originates... >> safer: with that cartoon? >> mankoff: with that cartoon. and that's true of the earlier cartoon in which the mother is saying, "eat it. it's broccoli, dear." >> safer: and the kid answers, "i say it's spinach, and i say the hell with it." the year was 1928. in those early days of bathtub gin and backstage musicals, it wasn't long before the magazine
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and the cartoons took hold in the national consciousness. in the 1933 film classic "42nd street," the "new yorker" had a short product placement role. >> then there will be 13 pages in the "new yorker..." >> safer: advertisers took note. outlining its plans to sell the new 1935 pontiac, general motors targeted the magazine's upscale readership. >> just the people for whom a pontiac would serve as an ideal second car. >> safer: the magazine still draws an affluent crowd, numbering a million subscribers. surprisingly, just roughly 10% live in and around new york, with the other 90% spread around the country, pockets of sophistication in the boondocks mapped out in saul steinberg's famous "new yorker" cover. >> mankoff: hey, how are you? paul, robert, come in. i suppose you came in here to
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show me cartoons. >> safer: every wednesday, a nervous band of ink-stained wretches gathers at bob mankoff's office... >> mankoff: well, let's see what you got here. >> all right. >> safer: ...hoping against hope to sell him a cartoon. as for what they're paid, no one's talking. >> sam gross: how many have been accepted, i really dn't know. >> safer: there's the grizzled veteran sam gross, who figures he's submitted 30,000 cartoons, give or take. 30,000?! >> gross: yeah. >> safer: many consider this his masterpiece-- a dog at heaven's gate, asking, "is there any chance of getting my testicles back?" >> gross: i still have to push the envelope. >> mankoff: sam has always pushed the envelope, things that you couldn't quite do. how you doing? >> very well. >> safer: there's always a little preliminary chit chat. >> how you been? >> all right. >> safer: farley katz specializes in the far out, in both cartoons and facial hair. >> mankoff: so what's going on with that moustache? are you still entering the contest? >> katz: no, i retired from the circuit. this is all, like, a
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recreational moustache. ( laughter ) >> mankoff: okay. >> safer: and then, mankoff speed-reads the rough sketches. >> mankoff: this is just too awkward a drawing. >> safer: most get rejected. he's seen the idea in one form or another before. >> carolita johnson: you know how, whenever they open your bag at an airport... >> safer: carolita johnson has an airport security cartoon, with the t.s.a. guy saying: "you can pack this back up now." emily flake has a joke featuring both king kong and godzilla. >> emily flake: the two heavy hitters in the monster world. >> it's as simple as that. >> safer: maybe it's just the day for facial hair, but joe dator seems to be a contender with a tarzan cartoon. >> mankoff: the apes are saying, "we found you and raised you as one of us. so we were just wondering, at what point did you learn to shave?" ( laughter ) >> joe dator: can i say i have researched this? there is no iteration of tarzan in literature, comic books or
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the movies in which he has facial hair. it makes no sense. >> mankoff: right. >> here's some of the stuff, around. >> safer: this is just stage one-- thinning out the candidates to take to the magazine's editor. >> mankoff: this is a little too straightforward. >> safer: he's largely noncommittal, pleasant but blunt... >> mankoff: well, it won't look right in our magazine. >> safer: ...when a drawing simply isn't good enough. >> mankoff: we're not that impressed. okay, next. it doesn't have enough charm. >> safer: the arithmetic is simple-- hundreds of cartoons are submitted every week, by mail, email or in person. and every week, there's only room for 17. >> mankoff: we're picky. >> ben schwartz: we cry afterwards, just loads of tears. >> safer: we assembled a roundtable of veteran "new yorker" regulars to talk about rejection: ben schwartz, who gave up being a doctor to draw cartoons; david cipress, roz chast, and charlie hankin, the new kid on the block. >> david cipress: we all
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probably do probably 700 or 800 cartoons a year we hand in. and it's... we're lucky if we sell 30 cartoons a year, so that's a lot of rejection. >> roz chast: when i do a cartoon and i think, "this is... they're going to love this one. it's a classic." >> cipress: that's the one that gets rejected, right? >> chast: that... right away, that goes into the garbage. >> charlie hankin: i was addicted to the rejection before i got addicted to the, you know, actually making the sales. >> safer: addicted to the rejection? >> hankin: kind of. it makes you feel alive. ( laughter ) >> mankoff: i know what that feels like. it feels a little bit like a punch in the stomach. it always feels bad. >> safer: mankoff should know. starting out, he submitted about 2,000 cartoons to the magazine before making a sale. this is one of his greatest hits-- "no, thursday's out. how about never? is never good for you?" he's lifted the line as the title for a memoir he's written, about his rise from the bronx to the big time. you write of your mother, molly- - "she wasn't really an audience
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for my jokes; she was a target." what do you mean? that sounds cruel. >> mankoff: well, it's freudian. my mother was this sexy, flamboyant, annoying woman to me. and also, i loved her. >> safer: like many an only child, he got smothered with love and pierced with sarcasm, fertile ground for his new yorky neuroses. >> mankoff: she thought i was lazy. i was lazy. >> safer: he talked back a lot, and developed a talent for one- liners and imitating jerry lewis. >> mankoff: you know, i would do the jerry lewis thing-- "hey, lady." and i did one of the things jerry lewis did. he had a mobile mouth, so i also had a mobile mouth. one of the first comic things that you do is imitate. >> david remnick: i have to say, when it comes down to it, he takes humor very seriously. >> safer: david remnick is editor of the "new yorker," the man who makes the final decision-- the decider-- on
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which cartoons get published and which don't. >> remnick: that's kind of nice. >> mankoff: i'd go with that one. >> remnick: just hang on. he is always trying to figure out what makes the little time bomb work, meaning the joke, meaning the cartoon. >> mankoff: you don't get it? >> remnick: no. he's very smart. the shell, the outward schtick is... >> safer: weird? >> remnick: comic. ( laughter ) but there's a real mind at work there. >> safer: one of his chapter titles in his book is, "i'm not arguing, i'm jewish." ( laughter ) >> remnick: bob's jewish? i had no idea. that's sweet. ooh. that's a great drawing. >> safer: this time, the cartoons that make the cut include joe dator's beardless tarzan... >> mankoff: i like the tarzan one, it's crazier. >> remnick: crazier is better. >> safer: ...carolita johnson's t.s.a. problem... >> remnick: i think this one is better. >> safer: ...emily flake's king kong and godzilla-- "i'm telling you, manhattan is over"... >> mankoff: brooklyn is very big. >> remnick: in it goes.
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>> safer: ...and a cat and mouse joke by sam gross. "have you no shame?" don't get it? you're not alone. >> remnick: at least five times a week, somebody will come up to me and say, "i didn't get such and such a cartoon." >> safer: including me. >> remnick: well, and here is the deep secret-- including me, once in a while. i will pick a raft of cartoons, and then later, it'll come time to run this cartoon. and i'll look at it, and i won't quite get it anymore. because sometimes the grenade goes off in the moment and then it doesn't repeat down the line. >> safer: well, a friend of mine who's a "new yorker" writer maintains there's at least one cartoon in every issue in which you're not meant to get it. >> remnick: i'm going to keep that myth alive. ( laughter ) >> safer: one more thing about the mad mr. mankoff-- ping-pong. while "new yorker" readers are relaxing with the cartoons, mankoff pings and pongs, often with will shortz, the noted crossword puzzle editor.
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mankoff's moves are half wile e. coyote and half scarecrow from the wizard of oz. >> mankoff: ping-pong itself, there's something a little bit funny about it, in that so much aggression is spent on this tiny, little ball. so there's a pillow fight aspect to it. >> safer: we end, as everything does, with the grim reaper. he's turned up in the "new yorker" countless times over the years. >> cipress: okay, so we have death... >> safer: in this recent david cipress cartoon, the reaper's latest acquisition is saying: "thank goodness you're here. i can't accomplish anything unless i have a deadline." >> mankoff: honestly, if it wasn't for death, i don't think there'd be any humor. ( laughs ) >> safer: bob mankoff believes humor is really our way of coping with anxiety-- anxiety about death, about work, relationships, the state of the world, the state of your health.
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so here's a prescription from the cartoon doctor. >> mankoff: illness and death-- primary sources of anxiety. one way of dealing with anxiety... >> safer: ...is to laugh at it. >> mankoff: ...is to laugh at it. grim reaper's going to get the last laugh. until then, it's our turn. ( laughs ) >> for more "new yorker" cartoons, and hear about morley safer's favorite, go to 60minutesovertime.com. sponsored by lyrica. it just wouldn't go away. my doctor diagnosed it as fibromyalgia, thought to be the result of overactive nerves that cause chronic, widespread pain. lyrica is believed to calm these nerves. i learned lyrica can provide significant relief from fibromyalgia pain. so now, i can plan my days and accomplish more. [ female announcer ] lyrica is not for everyone. it may cause serious allergic reactions or suicidal thoughts or actions. tell your doctor right away if you have these, new or worsening depression, or unusual changes in mood or behavior
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have you seen tom corbett's ads attacking me... get real. it's tom corbett who's been sticking it to the middle class on taxes. corbett cut a billion dollars from education... ...now almost 80% of school districts plan to raise property taxes. meanwhile, we're the only state that doesn't charge oil and gas companies an extraction tax. but corbett raised your gas taxes through the roof. i'm tom wolf, i'll be a governor who stands up for the middle class for a change. >> pelley: i'm scott pelley. we'll be back next week with another edition of "60 minutes." tomorrow, be sure to the watch
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